Marc Faber Warns "Social Media Stocks Are Just The Start, Market Crash Coming In 2nd Half"

Tyler Durden's picture




 

Having called for the demise of the hype/hope growth stocks, biotech, and social media schemes at the end of 2013, Marc Faber believes the weakness in those sectors is a signal of things to come (and that the so-called "rotation" to quality stocks is fallacious in the medium-term). Faber carefully notes that the size of markets allows some stocks to move up as others move down and so the overall market "looks" ok, but warns "we have already had a big break in parts of the market... but we haven't had the big break in the overall market," adding that "it's too late to buy the US stock market," confirming what we noted about Jeremy Grantham's dismal outlook for US equities in the medium-term (and how and when the bubble bursts). Simply out, given yields around the world and the fundamentals, "individual investors have excessively optimistic expectations about their future returns," which is terrible news for the record amounts of Greater Fools piling in as professionals pile out.

 

 

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Fri, 05/02/2014 - 20:28 | 4722486 1835jackson
1835jackson's picture

the laugh

Fri, 05/02/2014 - 20:37 | 4722502 fonzannoon
fonzannoon's picture

First off Grantham..."He then predicts the rally will regain steam in the fourth quarter and continue through the end of 2016. He sees at least 20% rally in the S&P 500 through the presidential election, one that would take the index to at least 2250, After that, it’ll get ugly"

So we can chalk all his genius up to just another "just after the election" guy. Whatever.

I find myself agreeing with Faber, except he seems to think you have to choose between the U.S and emerging markets. Why can't we choose neither?

 

Fri, 05/02/2014 - 20:40 | 4722511 InjectTheVenom
InjectTheVenom's picture

VIX sub-13 ... LOL

Fri, 05/02/2014 - 20:53 | 4722534 InjectTheVenom
InjectTheVenom's picture

Seriously though...talk about some seriously awesome Friday-nite Zerohedge doom porn ! Major doomchub in the Levi's ! Faber, miracles, Ukraine ... BOOM !

Fri, 05/02/2014 - 21:05 | 4722579 Bunga Bunga
Bunga Bunga's picture

Russel 2000 P/E > 100  LOL. Buy the dips, fuckers!

http://online.wsj.com/mdc/public/page/2_3021-peyield.html

Fri, 05/02/2014 - 21:05 | 4722582 James_Cole
James_Cole's picture

This is fabers bread and butter, definitely go with grantham (a guy who's actually good at predicting big moves). 

http://www.marketoracle.co.uk/Article13915.html

http://www.arabianmoney.net/us-stocks/2012/05/12/marc-faber-sees-1987-st...

http://www.cnbc.com/id/100950234#_gus

Funny quote:

Oct 2 2009: For those still in equities, we believe Tyler Durdern at Zero Hedge said it best, “Go long here at your peril.”


Fri, 05/02/2014 - 21:39 | 4722674 max2205
max2205's picture

Buy the fucking dip....oh wait Dow at new ATH ; (

Sat, 05/03/2014 - 01:14 | 4723055 Godisanhftbot
Godisanhftbot's picture

doom porn. you nailed it

Sat, 05/03/2014 - 01:17 | 4723059 AbbeBrel
AbbeBrel's picture

While Faber didn't make any pics at the Barron's roundtable for 2013 - he has #1 ahead of Zulauf on the scoreboard for 2002-2012...

 

 

 

http://blog.pundittracker.com/barrons-roundtable-2013-performance-update...

Fri, 05/02/2014 - 20:52 | 4722539 DoChenRollingBearing
DoChenRollingBearing's picture

Predicting the future in the stock market is a mug's game, IMO.  While I am bearish in the medium-term, I always have been bearish in the medium-term...

Just as well I never had the confidence to put all my money where my mouth was (or pull all of my money out of the stock market either).   I would be poorer if I held no stocks at all...

Diversification has worked very well for me.  I still hold stocks, though I sell them in tranches as they go up.  It will be hard for me to sell, as my stocks are about as low a percentage of what I own as ever in my life.

Still, if Grantham is right (and I have a lot of respect for him), yes, sure I will sell moar stawks if the markets continue going up.

Fri, 05/02/2014 - 21:43 | 4722682 stocktivity
stocktivity's picture

Blah, Blah, Fucking blah!  It's all Bullshit!!!!

Sat, 05/03/2014 - 01:16 | 4723057 Godisanhftbot
Godisanhftbot's picture

 Two kinds of people in the world. Those that get paid for talking bullshit, and those that listen for free.

Fri, 05/02/2014 - 20:34 | 4722497 grunk
grunk's picture

I thought The Crash was scheduled for the 2d quarter.

Blame it on the weather I guess.

Fri, 05/02/2014 - 20:39 | 4722509 Croesus
Croesus's picture

The Crash has been coming for a while now...it keeps being postponed, due to the weather. 

Fri, 05/02/2014 - 20:54 | 4722549 Redneck Hippy
Redneck Hippy's picture

Faber will be right one of these days (or years).  I hope he lives long enough.

Fri, 05/02/2014 - 20:39 | 4722506 Jack Burton
Jack Burton's picture

Is it possible that the Federal Reserve can out print any crash? Since 2008 they have printed us to a bull market and record corporate profits and a record growth in asset income returns to the top 1%. In fact, 2008 was the dawn of a new golden age for the highest income earners, especially those whose income is asset ownership based. While on the other hand, the wage earners and unemployed have been beaten senseless by fed policies, not to mention savers. I have run out of belief that the correction is coming, with war on the horizon, the Government has ordered the printing to boost markets and other assets to new highs, a happy investor class is a happy class of warriors in the global fight club.

Fri, 05/02/2014 - 20:43 | 4722514 surf0766
surf0766's picture

A bull market? If you say they printed us to a bull market ,, then it ain't a bull market.

 

Fri, 05/02/2014 - 20:44 | 4722518 sunnyside
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They can until they can't.   Not trying to be a smartass, but nobody can quantify when it will fail, but even the biggest bulls know it will someday.  Once confidence or desire for the dollar is gone ( a qualitative number, not quantitative) it all blows up faster than you can get your money out.

Fri, 05/02/2014 - 21:07 | 4722586 seek
seek's picture

Exactly. History is rife with examples that prove that no, the Fed can't outprint any crash. They can print their way out of all but the last crash. That's the doozy.

It will be very interesting (in a Chinese curse way I'm afraid) to see how this pans out relative to the German hyperinflationary episode. That one actually took 18 months to play out.

My guess is it'll take much less time in the US and the death throes will be much crazier as those in power grasp at straws to keep the ponzi running. Capital controls, price controls, border controls -- it will be a control freak's dream for a while as it all falls apart. They'll never be able to mobilize enough police/revenuers/etc to beat the endgame.

Sat, 05/03/2014 - 11:41 | 4723605 Snoopy the Economist
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"it all blows up faster than you can get your money out"

Obviously you have never heard of stop loss orders...

Sat, 05/03/2014 - 16:09 | 4724346 seek
seek's picture

I'm assuming you left off the /sarc tag.

If not... LMAO.

Fri, 05/02/2014 - 20:50 | 4722531 fonzannoon
fonzannoon's picture

Jack that 30yr bond is like being in a submarine heading toward a trench with the mechanics shot. Every few feet lower and you can hear the creaking and the cracking and you know what is next. The fed knows this and it's why they are screaming growth is coming and talking about raising rates. They need to get the velocity of money moving before it comes to a halt. They may start letting treasuries mature and run off the balance sheet which will immediately be followed by Schiff's suicide. It won't help the economy though. At some point we will get the reverse "Get to work Mr. Bernanke" moment from the fed, because they know that it's up to fiscal policy to start handing out some goodies to joes sixpack, and that ain't happening. So yes, they will defend the stock market at all costs, but if people choose bonds they will be overrun by the move towards nirp and you will see this machine grind to a screeching halt.

Fri, 05/02/2014 - 20:55 | 4722537 CrashisOptimistic
CrashisOptimistic's picture

First of all, QE is all on deposit at the Fed as excess reserves.  The bonds were bought, the banks who sold them put the cash back in the Fed.  It left the Fed, and re-entered the Fed.  Only a few hundred billion less than the total of QE to date is registered as growth of excess reserves deposited by banks at the Fed.   Hence, no inflation explosion.

Second of all, austerity.  Sequester took a lot of money out of the deficit, as did the millionaire's tax of Jan 2013.  Deficits are fiscal stimulus.  That stimulus is being withdrawn.  Bonds to buy as part of QE are getting scarce.  Part of the reason yield is dropping.  Those not already held at institutions or foreign are getting scarce.  Demand for them drives up their price, and down goes the yield.

Oil is $100.  An enormous number of things can be concealed beneath this burden.  Low short term rates as far as the eye can see pays for the drill rigs fracking in ND and Texas and Colorado.  Lower price, or higher rates, and you don't get US oil flow anymore.  Then the US returns to exploding its trade deficit as oil imports grow.

So stop thinking about crash or boom.  It's not going to matter.  When the crash is going to happen, you won't have any warning or time to maneuver.  It will be Sunday night, the market will circuit breaker in the first millisecond and not open that day -- nor the next day -- nor the next day. 

And understand that as it all disintegrates this means your shorts or puts will never be paid.  So . . . don't play at all.

 

Fri, 05/02/2014 - 20:58 | 4722562 fonzannoon
fonzannoon's picture

Someone a lot smarter than me just pointed this out to me

http://research.stlouisfed.org/fred2/series/M2V/

and said... "that M2 chart, right? I mean wow man there is no bottom there it just keeps tanking, lowest reading ever for Q1 2014.


Stawks are the only proven transmission mechanism so far. So they cant let the market go down, if they did there would be no holding the financial system up anymore. This 2014 churn is the Fed's version of a crash.

Bonds are a whole nother story man, its tough to say, I mean so far the threshold at 2.5% is there. Everyone thought it would be the gold market where people would eventually refuse to sell at manipulated prices. turns out its USTs lol... everytime the Fed raises rates from here its going to look like the opportunity of a lifetime to get a little bit of yield in a ZIRP universe. I dont know how exactly they will deal with that curve compression but they better be throwing some shit at the wall in those emergency sessions because pretty soon they are going to need to make some muscle flexing moves."

Fri, 05/02/2014 - 21:19 | 4722612 seek
Sat, 05/03/2014 - 11:33 | 4723582 Buckaroo Banzai
Buckaroo Banzai's picture

Great chart, Seek. It proves that we are still mired in a depression that is worse than the (formerly) great depression. Funny how that chart never sees the light of day.

Fri, 05/02/2014 - 21:34 | 4722652 seek
seek's picture

"And understand that as it all disintegrates this means your shorts or puts will never be paid.  So . . . don't play at all."

Realisitically one should be worried more about getting money out of the bank(s) when this happens, let alone short/put payouts.

Fri, 05/02/2014 - 23:41 | 4722944 Babaloo
Babaloo's picture

I agree with nearly all your post Mr. Optimistic (or can I call you Crash?) except for your points about interest rates driving the fracking boom. I think the roi on fracking is high enough that it would survive higher rates.

Sat, 05/03/2014 - 11:38 | 4723596 Buckaroo Banzai
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Crash-- it gets more interesting when you consider that US gasoline demand has dropped by 65% in the last 8 years, and yet the POO is much closer to all time highs than all time lows.

I think its safe to say that both oil and stawks have been a dumping ground for inflation.

Fri, 05/02/2014 - 22:48 | 4722860 bardot63
bardot63's picture

Hang in there, Jack B.  Dow goes up, until it doesn't.  The market rides the phonied-up numbers, until it doesn't.  You don't control the temperature by breaking the thermometer.

Fri, 05/02/2014 - 22:59 | 4722869 TheMeatTrapper
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Jack:

I too have decided that we cannot predict events. TPTB can and will "win", no matter what. 

My strategy has shifted from "waiting for the collapse" to "living outside the system" and thinking about providing for my 10 year old son

I plan to leave him a property to live on - paid for. I plan to leave him a quantity of silver coins. I plan to leave him weapons and ammunition and the skill to use them. I plan to leave him traps, snares and the knowledge to put meat on the table. I plan to leave him a functioning garden and the experience of growing food. I plan to leave him with solid, American made tools. I plan to leave him with the knowledge that a man must provide by the sweat of his brow for his woman and his children - and that that is a good thing. 

That's about the extent of my 'solution'. I cannot alow myself to be outraged at the manipulation of the stock market. I must take solace in the knowledge that I can catch and eat beavers and frogs. The funny thing is, the more I learn about trapping and foraging, the more I realize how difficult it is - and just how few of my fellow hominids are capable of doing it these days.

Our day will not come, as it is already here, today.  

Sat, 05/03/2014 - 08:21 | 4723304 Ban KKiller
Ban KKiller's picture

In amerika that is revolutionary.

Sat, 05/03/2014 - 21:17 | 4724923 Midnight Rider
Midnight Rider's picture

Only now it may appear that the Fed realizes their interventions are decimating 99% of the voting public. It may take time, but I don't think the 99% are going to take it forever. They do ultimately have the power of the vote and someone or someones will rise up to take the cause. Out of 315 million people in the 99% the odds are this will happen at some point.

Sat, 05/03/2014 - 21:56 | 4724986 Midnight Rider
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Greenspan in the end admited his error in not understanding the level of greed in the the banking system and it's ultimate effect on the economy and overall financial system. The current Fed will ultimately have to come face to face with the same greed of the 1% they are feeding and it's same effect on the overall economy and financial system. The 1% have absolutely no interest in any talk of 'trickle down' to help the overall economy. You know, like hiring someone instead of buying back your own stock with free money from the Fed so you can get a bigger personal bonus and hitch your ski rope to that third yacht, because two yachts simply will not cut it anymore. As none of the underlying issues in the financial system and economy have been addressed, the wallpaper will ultimately tear, just as it has after each and every prior misguided Fed pump.

Fri, 05/02/2014 - 20:39 | 4722508 Yen Cross
Yen Cross's picture

 Ahhh-haha-haha-ahh-haa-haaa!  This SHIT and 'pony tails' is getting really old!

Fri, 05/02/2014 - 20:54 | 4722550 blindman
blindman's picture

rhetorical questioning, what says jim grant?
.
http://www.grantspub.com/resources/video.cfm
.
oy...on and on ...just, why bother?

Fri, 05/02/2014 - 21:17 | 4722614 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

Faber why you trollin' bro?

Fri, 05/02/2014 - 23:31 | 4722931 ABG LINE
ABG LINE's picture

LoL!

Fri, 05/02/2014 - 21:54 | 4722710 PT
PT's picture

I'd like some better evidence for his reasoning.

I thought real estate was over-priced and due to go down back in 2000.  It didn't.  Not saying I know anywhere near as much as Faber.  Just saying that obvious, visible reasons haven't meant anything for 15 years now.

Don't generalize.  Spell it out to me.  Tell me exactly why the markets will crash.  Then tell me exactly what the Powers-That-Be will do to prevent the crash.  And then tell me exactly what will cause TPTBs plans to fail.

Don't show me the dc analysis of an ac circuit with multiple active components and feedback paths.

Having said that, Shadow Govt Stats says hyperinflation by the end of 2014.  I guess we'll find out in 8 months time.

Fri, 05/02/2014 - 22:00 | 4722727 I Write Code
I Write Code's picture

Shadow Govt Stats says hyperinflation by the end of 2014.

Yah.  Well, I (and others) said hyperinflation by 2009, and it didn't happen.  Bernanke said nicerinflation in 2008 and that didn't happen.  He expected that, he wanted that, and he was all ready to jump on it so it didn't go hyper.  Well, he didn't have to.

In a global market if China has even a partial meltdown coming, more capital flight to the US, which overall is what has kept us afloat for - must be twenty years now, or thirty.

Even Shadow Stats can be captive to old thinking.  These are new times, crazy times, and there just ain't no tellin' what's next.

Fri, 05/02/2014 - 22:12 | 4722770 PT
PT's picture

I have a soft spot for Shadow Stats.  Originally they said 2020, then backed it off to 2016, then 2014.  Unfortunately, I never figured out their methodology  (either I'm too dumb or they just did not say).  "Even Shadow Stats can be captive to old thinking."  I agree.  "These are new times ..."  I agree again.  I just wish we could see better analysis of what is really happening.

Fri, 05/02/2014 - 23:13 | 4722902 I Write Code
I Write Code's picture

We can all be captive to hysteria, lord knows there's reason for it.

But things have been holding together since 2008 far better than textbooks would have predicted.

So all we can do is try to grin and bear it, and try to come up with theories that don't conflict too much with known facts.  The math(s) do make sense, that's the one thing we can be sure of, so if we think they don't we're doing them wrong.

Sat, 05/03/2014 - 08:39 | 4723322 Jumbotron
Jumbotron's picture

I've been saying 2020 for years....but from a bit of intuition coupled with a LOT of trends from Peak Cheap Energy, Peak Medicaid, Peak Obamacare, Peak Social Security, Peak Ponzi, Peak Debt, Peak Student Debt, Peak Consumer Debt, Peak Old Farts (Baby Boomers) retiring, Peak computer software and robotic automation, Peak Global Wage Arbitrage, Peak American Empire, Peak Dollar Reserve Currency.....and others......which all start to REALLY accelerate starting around 2020 and shortly thereafter.

Until then....the QEternity inspired business cycle will continue with some ups and downs.  But come 2020...give or take a Black Swan event.....and shortly after....the wheels really start to come off for the whole world to see and acknowledge.

Things will get "interesting" then.....in a Chinese proverb/curse sort of way.

Sat, 05/03/2014 - 08:40 | 4723328 Jumbotron
Jumbotron's picture

In short.....this chart....which says it all and was made in 2005.

 

https://1.bp.blogspot.com/--W8mdCVwsM0/TdvLq26vSpI/AAAAAAAAATg/whcFEClwj...

Wed, 05/07/2014 - 08:08 | 4735334 PT
PT's picture

Thanks for that Jumbotron.

In short it was all my fault.      :P

My original intention was to solve the oil problem after I solved a couple of other problems, but that all kinda went south after I dropped out of uni and had the most difficult time getting a foothold in the workforce.  I was hoping I'd figure some kind of way of going back to uni without going into debt, as I was also hoping I could build some kind of capital base that I could "waste" on R & D.  Once again, my optimism has been punished.  I guess someone else will have to have all the fun.

Fri, 05/02/2014 - 22:03 | 4722736 PT
PT's picture

Unfortunately, evidence such as "Russell 2000 PE > 100" and "average person cannot afford cheapest house" isn't good enough.  It should be good enough, but it isn't.  The world kept on going, continuing to function even though it no longer made any sense.  What will be the trigger that forces the fantasy to collapse? What trigger will force maths and reality to re-assert themselves?  All other information is (almost) useless.  We know the maths doesn't make sense.  But it hasn't made sense for 15 years.  What will change?  What will stop the maths from "not making sense" for the next 6000 years?

Sat, 05/03/2014 - 18:00 | 4724570 Thisson
Thisson's picture

The interest on debt is growing faster than output is growing.  At some point, the vigorish exceeds productive capacity.  At that point, the crisis must be resolved.

Fri, 05/02/2014 - 21:55 | 4722714 I Write Code
I Write Code's picture

What expectations?

I wasn't impressed by the crazy valuations when they went up and I'm not depressed by them when they crash back down.  Hey, it's the one *sensible* thing this frickin' market has done in years.  Those who play in that sandbox aren't investors anyway, they're speculators, or muppets.

What are my expectations for equities right now?  To hold steady after taxes and inflation.  Actually, that's more of a hope than an expectation.   Buy some safe dividend stocks yielding 3% taxable, see the stocks increase with the economy at 3% (I wish), maybe get another 2% by choosing stronger than average companies, pay 30% taxes on dividends and short and long term gains, and hope for better days. 

It was the best of times, it was the worst of times, ...

 

Fri, 05/02/2014 - 22:22 | 4722796 Luckhasit
Luckhasit's picture

Here comes the lemmings!

Fri, 05/02/2014 - 23:16 | 4722913 cornflakesdisease
cornflakesdisease's picture

Well . . . .

$12 Trillion MZM + No returns + Gov manipulation = Higher stock market

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